Economy in China coming to a slowdown

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By yingzi / 1 October 2012 / 0 comments

 

Due to the effects of structural repositioning between investment led growth toward more consumption led growth, China’s economy is expected to slow down. Coupled with a weakening external demand, the cyclical slowdown is unavoidable. This is a topic that has been hotly debated in the past few weeks, but it is possible to trust that the policy-makers’ reservation to not ‘push the housing button’ is an intentional positive sign, and not the result of a political power vacuum.

With regards to the ground situation in China, it has been observed that job security concern is not seen among the local Chinese people and expat managers. There are no notable dismissals or companies hiring freezes. This period is different as compared to the previous economy downturn period at the end of 2008 and beginning of 2009, where everyone were rather jumpy about losing their jobs and companies dismissing or furloughing workers.

During this period of uncertainty, it is a positive sign that there are no prevalent cases of project cancellations or plan retractions. But it is however, common to have clients delaying their decision-making about new investment or office relocations. It is only a matter of time before the ball starts rolling. This scenario is different from 2008/09 as back then, projects were either being cancelled or all talk, despite the positivity seen by the local China management about the incentive led recovery. Global headquarters’ decision-makers were unable to provide money for any new investment and avoided the talks of it.

The consequences of the economic slowdown for commercial real estate in China are that demand has softened, leases are taking longer to sign and negotiations are being put on hold. But people are not alarmed and demand has not disappeared. Landlords with diminishing pricing ability in most markets are not reducing the rent as yet. Amongst all these conceals confidence and opportunities that most companies sees in their industries. While it is wise to be prudent, the demand is still out there.

As we observe the market and calculate from the statistics, nothing beats hearing the decision makers coming down in person to discuss this phenomenon. Hear the experts talk,as Real Estate Investment World (REIW) China 2013 will be held on the 15-18 April 2013 at The Ritz Carlton Shanghai Pudong, Shanghai China. Sponsorship opportunities are now open for bookings and click to download a copy of the prospectus. Profile your corporate brand and showcase your thought expertise with the rest of the real estate owners out there!